Kiva: Not Charity or an Investment, Pretty Darn Satisfying
My wife and I have been members of Kiva since day one. What a way to help someone in a big way…for a small amount of money…
Kiva is a non-profit that does microlending, which, as the name suggests, means giving very small loans. Microlending first got some notoriety from Muhammad Yunus and his Grameen Bank, which made (and still makes) super-small loans to poor entrepreneurs in Bangladesh. (Yunus won the Nobel Peace Prize for it.)
Kiva is the exact same concept, except the organization is sort of a clearinghouse Web site that allows you to make microloans to entrepreneurs throughout the world. Some of the loans are as small as $200, some are as large as $1200, and you can make partial investments of as little as $25. Kiva works with various organizations throughout the world and funnels your investment to them.
Looking at the site today for example, Cynthia in Nigeria is looking to raise $450 for her beauty salon, Zikrillaeva in Tajikstan is looking for $825 to expand her small computer and printing center, among other small loans being sought.
Now here’s the catch, if you are thinking this is like Prosper.com, where you’re doing person-to-person lending for sometimes high interest rate returns: Kiva only gives you your money back. You do not make money off of these small entrepreneurs; you’re in this to help them out. In well over 95% of the cases, all of your “investment” is returned to you, but the returns are only psychic, not monetary. You get reports on how the businesses are doing, and you get to feel good about helping some people make a better life, but if you put $25 in, you’re going to get $25 out.
So, it’s not a charity, in that your money comes back to you, but it’s not an “investment” in the financial sense of that word, because your money does not grow. But it’s still pretty cool, which may explain why most of the loans are completely funded in less than one day.